KUALA LUMPUR (Sept 3): Malaysian manufacturing conditions improved for the first time in seven months in August.

The Nikkei Malaysia Manufacturing Purchasing Managers’ Index (PMI) — an indicator of economic health for the manufacturing sector - rose from 49.7 in July to 51.2 in August.

This reflected growth in new orders for the first time in seven months and a faster rise in output, said IHS Markit, which compiles the survey, in a statement today.

It said on the price front, input cost inflation eased to the slowest since February 2015.

IHS Markit said looking ahead, business confidence was the strongest reported since April’s multi-year peak.

The latest reading pointed to a modest improvement in manufacturing conditions across Malaysia, ending a six-month period of deterioration, said IHS Markit.

IHS Markit economist Aashna Dodhia said: “August data signalled an improvement in manufacturing conditions for the first time in seven months against a backdrop of improved demand conditions, indicated by the fastest gains in both output and new orders since November 2017”.

She said PMI price indicators meanwhile signalled easing inflationary pressures during August, which may have played a key role in boosting customers’ purchasing power.

“Indeed, output charge inflation was only fractional as input cost inflation moderated to the weakest since February 2015, reflective of the abolition of the Goods and Services Tax in June.

Dodhia said Malaysian manufacturing companies raised their purchasing activity for the first time in nine months. The upturn was reportedly due to stronger demand as well as stock building initiatives undertaken by manufacturers ahead of the re-implementation of the Sales and Services Tax.

“Looking ahead, business sentiment towards the 12-month outlook for output strengthened to a four-month high, with confidence rooted in positive forecasts of sales and an expected improvement in underlying demand,” she said.